Indo Rama Synthetics (India) Ltd. has announced that it has signed a memorandum of understanding (MoU) with the Tamil Nadu Government on November 5 for setting up a petrochemical project for manufacturing purified terephthalic acid (PTA), polyethylene terephthalate (PET) resin and polyester staple fiber (PSF).
India’s largest dedicated polyester manufacturer, the company registered sales for Q2 2012-13 at Rs. 734.50 crores as against Rs. 771.71 crores in Q2 of the previous year. Sales have been marginally lower due to weak export demand on account of disturbances in the European and Middle-East markets. The company recorded profit after tax at Rs. 103.59 crores in the quarter (Rs. 22.84 crores). It managed to maintain the margins at the levels seen in Q2 of the previous year.
Repayment of loans brought down the finance costs substantially as compared to previous quarters. The profitability in the quarter was boosted, primarily by strengthening of the rupee and reversal of mark to market losses incurred in the previous quarter as the rupee moved up from Rs. 55.62 to Rs. 52.86 a dollar.
Overall, in H1 2012-13, the company delivered a net sales performance of Rs. 1,488.63 crores, a modest increase of 6.9 per cent over Rs. 1,392.36 crores in H1 of the previous year, despite a lack-lustre market. Profit after tax jumped to Rs. 77.49 crores, an increase of 171 per cent, from Rs. 28.60 crores.
With polyester prices bottoming out in the quarter and the upward movement in cotton prices, the company expects to see improvement in demand in Q3 FY 2012-13. The current stability and strengthening of the rupee, if sustained, will have a positive impact on the margins.
The company successfully completed some key margin improvement projects during the quarter. The project to add 11 mw of power to utilize the spare boiler capacity for captive consumption has been successfully commissioned. It has also successfully expanded its production capacity for the value-added draw texturized yarn (DTY) from the earlier 64,800 tonnes to 98,145 tonnes with the installation of 14 new machines. All the machines were commissioned by the end of this quarter.
As a diversification strategy into the renewable energy business, Indo Rama Synthetics has, through its stepdown subsidiary, Indo Rama Renewables (Jath) Ltd., has entered into a binding contract for setting up a 30 MW wind turbine project using Gamesa G-97 turbine in Maharashtra. The project with an estimated cost of Rs. 225 crores is expected to commence commercial operations by March 2013.
Commenting on the results, Mr. O.P. Lohia, Chairman and Managing Director, Indo Rama Synthetics (India) Ltd., said: “The company has demonstrated its resilience in these challenging economic times. The successful completion of our cost improvement initiatives will further add to our competitiveness. With the polyester prices bottoming out and the rupee stabilizing, we expect the sentiments and performance to only improve from hereon”.
Indo Rama Synthetics is India’s largest dedicated polyester manufacturer with an integrated manufacturing complex at Butibori near Nagpur having a capacity of 6,10,050 tonnes per annum of polyester staple fibre, filament yarn, draw texturized yarn, fully drawn yarn and textile grade chips.